Amazon’s Earnings: What to Watch

When Amazon.com reports second-quarter earnings after the closing bell Thursday, investors will be looking for an improvement in the company’s narrow profit margins.

Analysts expect the Seattle-based online retailer to report $15.74 billion in sales, which would represent a 23% jump from a year earlier. Net income is likely to be $28.3 million, a four-fold increase from last year, according to analysts’ estimates.

Despite operating margins that have been less than 1% in recent quarters, Amazon shares have jumped 20% this year.

“I don’t know how long they can keep getting hall passes” on profit margins, said Colin Gillis, a BGC Partners analyst. “The difference between Amazon and a traditional retail business is what Amazon is paying in shipping.”

Mr. Gillis said he expected operating profit to drop to 0.6% from 0.8% in last year’s second quarter.